Digital Transformation and Innovation Investments

Abstract

Digital transformation is a key factor in realizing innovative development and driving economic growth, driving companies to improve competitiveness, efficiency, and sustained growth. Innovation investment is an important source of funding for corporate innovation. Does digital transformation affect the tilt of corporate economic resources toward innovation investment projects? To answer the above question, this paper empirically examines the impact and mechanism of digital transformation on corporate innovation investment using a panel regression model with A-share listed companies in Shanghai and Shenzhen, China, from 2012 to 2022 as the initial research object. The study shows that the digital transformation of enterprises will increase the level of innovation investment, and this effect is realized by increasing the level of human capital, reducing surplus management, and lowering the level of cash holdings. The results of this research will provide strong support for enterprises to improve the motivation of innovation investment and innovation quality, help realize the goal of high-quality development of China's economy, and provide an important theoretical basis for relevant policy formulation and decision-making.